Covered Bonds

For the first time the European Central Bank waded into the primary market to buy covered bonds for its third purchase programme (CBPP3) this week, as eurozone issuers from the currency bloc’s core and periphery returned after a long hiatus. The central bank’s buying may not be so good for core issuers but the evidence so far suggests peripheral names who have been locked out are about to bask in its largesse.

The European Central Bank’s covered bond purchase programme entered a new phase this week as eurozone issuance enabled it to buy the primary market, rather than relying on secondary where supply is drying up. Its buying is good news for peripheral banks but may cause investors to desert the core.

Banco Sabadell returned to the covered bond market for the first time since January 2013 to launch a seven year Cedulas Hipotecarias which priced in line with Credito Emiliano's earlier deal of the same tenor. The deal was less reliant on demand from official institutions than Emiliano and will send a strong message to other peripheral issuers that may be looking to refinance liquidity borrowed under the long term refinancing operation.

The European Central Bank’s covered bond purchase programme entered a new phase this week as eurozone issuance enabled it to buy the primary market, rather than relying on secondary where supply is drying up. Its buying is good news for peripheral banks but may cause investors to desert the core.

Czech Raiffeisenbank priced the first publicly syndicated euro benchmark covered bond from the country on Wednesday. At the same time, Toronto Dominion Bank mandated leads for its first Australian dollar covered bond.

Bank of Nova Scotia (BNS) priced its third euro benchmark of the year, and its fourth covered bond benchmark across all currencies, on Tuesday. The deal took advantage of space created by robust Eurosystem central bank demand at the short end. And responding to reverse enquiry, the issuer also priced a £250m three year floater.

For the first time the European Central Bank waded into the primary market for covered bonds for its third purchase programme (CBPP3) this week, as eurozone issuers from the currency bloc’s core and periphery returned after a long hiatus. The central bank’s buying may not be so good for core issuers but the evidence so far suggests peripheral names who have been locked out are about to bask in its largesse.

Credito Emiliano became the second issuer to take advantage of the European Central Bank’s (ECB) buying programme, launching a covered bond on Thursday. The deal led to a repricing of the issuer's curve in a move that could spur other peripheral names to return to the market.

Moody’s has published a comparative analysis of the Brazilian and German covered bond legal frameworks. The Brazilian law known as, letras imobiliárias garantidas (LIG), has a number of notable strengths, said Moody’s in a report published late on Wednesday. But as regulators have yet to decide on some features of the law, there are elements of uncertainty.

Nordea Finland has issued the first deal from a eurozone bank that is eligible for the European Central Bank’s covered bond purchase programme. Though it was priced at the tightest ever spread for a 10 year deal for a non-German issuer, investors said it offered good relative value.

Czech Raiffeisenbank opened books for the first publicly syndicated euro benchmark from the country on Wednesday and had attracted sufficient order interest at the guidance level to make a deal viable. At the same time, Toronto Dominion Bank mandated leads for its first Australian dollar benchmark.

Bank of Nova Scotia (BNS) was set to price its third euro benchmark of the year, and its fourth covered bond benchmark across all currencies, on Tuesday. The €1.25bn tranche took advantage of space created by robust Eurosystem central bank demand at the short end. Responding to reverse enquiry, the issuer also priced a £250m three year floater on a book that was twice subscribed.